Business information systems:

Week 3: enterprise information systems:

Plan for Enterprise Information Systems Stream

Enterprise Information Systems as the major building block of IS.

Information Systems – Pace Layers

• Some complex, large-scale systems remain largely unchanged for years once implemented;
others may target very focused requirements within a single functional area and evolve,
appear, and are decommissioned in a matter of months or weeks. (they fulfill the needs and
requirements of the functional process and then get decommissioned in a matter of weeks)
- simplified: there are some information systems which stay with the organisation for a very
long time, but there are some systems which are developed for a very specific need and once
that need is fulfilled the system gets decommissioned and they focus on the new systems.

• The rate of change has implications on how much involvement and effort from IS function
is required/feasible in guiding the selection and implementation process.
• One helpful way of thinking about this issue is “Pace-Layered Application Strategy”
(Gartner)

Information Systems – Pace Layers

An organisation’s information systems do not change at the same rate.

Garnter’s Three IS Pace-Layers:

• Systems of Record: support the core of business transactions and manage critical master
data with a slow rate of change, common functions between organisations and often
subject to regulatory changes. E.g., regulations that businesses must comply, or where the
primary value delivered is consistency of the process that the organisation is focusing on. Do
not provide any competitive advantage to the business and need to be executed efficiently and
effectively.
o E.g., a banking organisation. A bank has a lot of key systems that make it operational
e.g., core banking system, loan management system and document repository. These
are systems that a bank needs to implement to become operational and are the systems
that will stay with the bank for a very long time e.g., more than 10 years. In terms of
functionality, the changes in these systems are less but in terms of the data these
systems store, e.g., customer information, transactional records, debit, and credit,
these are the systems that are very secure in nature. These systems are under a lot of
regulatory compliance and have many checks.
• Systems of Differentiation: applications utilising unique company processes or industry
specific capabilities, with medium-cycle change (e.g., 3-4 year) requiring frequent
reconfiguration to accommodate changing business practices or customer requirements.
Involved in competitive advantage. Business leaders here want to change or adopt approaches
to these ideas regularly to help the organisation achieve goals and stay ahead of competition.
o e.g., a bank implementing differentiation in requiring a loan – making an automated
loan system that will have an online delivery system.

• Systems of Innovation: new applications built on an adhoc basis to address new business
requirements or opportunities, with a short life cycle using departmental or outside
resources and consumer-grade technologies. The business is in experimentation mode to get a
unique competitive advantage. E.g., Microsoft, google, Netflix to come up with new ideas,
operationalise them and deliver their products and services in a novel and innovative way.
o E.g., in a bank having chat bots be first point of contact with customers to understand
the problem and to give standard answers. (first need to do a proof of concept and test
it on a small group of customers and once the desired outcomes/ responses and fixes
that need to be done – develop solutions, and either decide to go forward with the
application or leave it (if unsuccessful). (proof of concept kind of project).

Enterprise Information Systems: (remember the 6 components of information system)

• Enterprise Information Systems are large-scale software (big systems that give a lot of
different functionalities to the system) hosted on server(s) and delivered
to end-users over a network to directly support or inform the execution of business
processes.

Today, most enterprise-scale systems are packages developed and sold by

specialist vendors (rather than built in-house). – are accessible and delivered to the whole
organisation, not specific departments, or function.
• Such systems are usually complex and costly to implement (fit Gartner's “systems of
record” definition). – standardised systems – the vendors can develop those functionality
standards and the organisations can implement or deploy these systems according to their
own business need.
• In order to innovate and differentiate themselves from competition, organisations often
build smaller, targeted solutions to extend and/or complement these enterprise information
systems or to experiment with new technologies. – explore in week 5.

Here shows different

applications that form an
enterprise information
system (combination of
different applications that
equal an ecosystem). –
make an organisation
operational.

An organisation needs to
have all of these
applications deployed and
working in their environment and also connected to a centralised database (which is
recording all the transactions and data) which organisations can then explore – and make
decisions.

CRM: customer relationship management.

SCM: supply chain management.

Enterprise Resource Planning (ERP):

• An Enterprise Resource Planning system is a packaged business software system that allows
a company to:
• Automate and integrate the majority of its business processes
• Share common data and practices across the entire enterprise (centralised data base and all
the systems are feeding and connecting to it across the entire enterprise– shown above)
• Produce and access information in a real-time environment.

• Core focus was initially on “back-office” functions, particularly Finance and Manufacturing
(successor of Material requirements planning (MRP)
• ERP could be thought of as a “generalist” system that lies at the core of the application
architecture of most large organisations.
• Major vendors include:

ERP Five Views:

• What is an ERP system? Depends on whom one asks. We will consider five different
perspectives:
• Top Management View (value proposition) – what that system is bringing to the
organisation? What sort of business value does this system deliver? What will I achieve at the
end?
• Architectural View (fit with the IT platform) – decide the architecture of the system, and
think about how it will relate with different processes, and IT platform perspective)
• Functional View (what can the system do for the particular function in the organisation)
• Process View (how the system maps to different organisational processes)
• User View (getting my job done) – how the particular user of the system will get the job
done.

• Note: When communicating about IS issues (and particularly large-scale systems such as
ERP), IS professionals have to tailor their message to align with the view of the relevant
stakeholder(s). – need to think about who you are interacting with in terms of these different
perspectives – and depending on which perspective, you will deal with the relevant audience
accordingly).
Top management view:
- all of this is in the
context of ERP
system.
- Middle layer is more
interested in the
financial aspect and
come up with
different indicators to
help them plan for
the future.

- Simple diagram
showing how
different systems
work if they are
not integrated/
delivered to a
centralised ERP.
Instead they have
their own
individual data
base system and
they are working on their own standardised system.

With ERP these systems can be

combined together and are connected
to a centralised repository (ERP
database). All of these systems feed to
the ERP system and this is where the
best efficiency and effectiveness is
and is accessible to all the functional
repositories.

Process and functional view of an organisation:

functional: the information
flow within the functional
view remains within the
same department of
function.
Process view: information flow occurs across all the functional groups.

Information flow remains

within their category (not
flowing across the
different functional
department).

Information flow across different

functions of ERP.

Summary
• An organisation’s application portfolio consists of a wide variety of larger and
smaller systems, that evolve and are replaced at a different pace.
• Enterprise Information Systems are large-scale software hosted on server(s) and
delivered to end-users over a network to directly support or inform the execution
of business processes.
• Enterprise Resource Planning is a packaged business software system that sits at
the heart of the application architecture of many large organisations and allows a
company to automate and integrate the majority of its business processes, share
common data and practices across the entire enterprise, and to produce and
access information in a real-time environment.

Review Questions
• What is an Enterprise Information System (EIS) and how does EIS deliver value to
organisations?
• What is Gartner's Pace-Layered Application Strategy and why should organisations use it?
• What are the strengths and weaknesses of packaged enterprise applications as compared
to in-house built “legacy systems”?
• Critically discuss the following statement:
“Information systems are the most valuable asset of an organisation. When poorly managed,
they hinder the performance of day-to-day business activities, prevent the solving of business
problems, and limit the ability to compete and innovate.”
Discuss this statement relative to the implementation of Enterprise Information Systems of
Records.